Ask HN: How to prosper under negative interest rates? • Hacker News Board

Re: Ask HN: How to prosper under negative interest rates?

#91

Post by Der_Einzige » Tue, Mar 31, 2020, 5:14 PM UTC

thorwasdfasdf wrote: post #82

qeternity wrote: post #8

You have to look at real rates, not nominal rates. The only markets that have negative nominal rates are battling deflation (which the US is not) or have serious liquidity concerns at the moment. The Fed is unlikely to go negative as they face a very different beast. Here's a quick example. Let's say you're in a deflationary environment: in 1 year, your money actually buys you more than it did last year, let's say fo…

but we're not having deflation. With fewer and fewer people working, there's less and less supply with even larger demand, now that they're printing money like never before. As a result, we're going to get really really serious inflation of over 2%, 3%, maybe even more than 3%. It doesn't sound like much because we've become innured to it. But, it's really bad. Just think, you earned 100K in 1 year and 1 year later i…

At the moment, foreign demand for the dollar is so high that we are experiencing deflation (liquidity is still too low which is entirely why the fed is moving towards negative interest rates), in spite of the money printer going "brrrrr"

Re: Ask HN: How to prosper under negative interest rates?

#92

Post by Der_Einzige » Tue, Mar 31, 2020, 5:15 PM UTC

rayuela wrote: post #51

6keZbCECT2uB wrote: post #41

Earlier quoted context omitted.

When was the last time that the United States had a deflationary period during good market conditions? This might be a pretty new condition for some people.

What do you mean by "good market conditions?" Also, we're definitely not in deflationary conditions - this implies a decrease in prices of goods. The shock to supply chains is actually going to make things more expensive. What we're really looking at is the possibility of stagflation - inflation + fall in demand.

Check currency trading platforms - we are deflationary as of this moment.

Re: Ask HN: How to prosper under negative interest rates?

#93

Post by MuffinFlavored » Tue, Mar 31, 2020, 5:17 PM UTC

qeternity wrote: post #8

You have to look at real rates, not nominal rates. The only markets that have negative nominal rates are battling deflation (which the US is not) or have serious liquidity concerns at the moment. The Fed is unlikely to go negative as they face a very different beast. Here's a quick example. Let's say you're in a deflationary environment: in 1 year, your money actually buys you more than it did last year, let's say fo…

> The Fed is unlikely to go negative as they face a very different beast.

Does the United States risk doing damage to our currency and how other nations use it with the stimulus/money printing that is going on?

Re: Ask HN: How to prosper under negative interest rates?

#94

Post by Der_Einzige » Tue, Mar 31, 2020, 5:18 PM UTC

chvid wrote: post #74

mkaymalright wrote: post #65

Earlier quoted context omitted.

Spot-Futures arbitrage, especially if your brokers allows you to collateralize your futures position with the profits from your spot position which would allow for higher leverage on the futures side. Let's say the futures price is higher than the spot price and there is 3 months left until maturity. You sell the same (USD equivalent) amount in the future (expensive) and buy in the spot (cheap). You just made a profi…

No. Buy a house and some stocks in growth sectors.

No - You're wrong and the person you're replying to is right.

Futures are how you multiply your money with relatively low risk. Stocks are how you get 5% returns amortized YOY if you're lucky

Re: Ask HN: How to prosper under negative interest rates?

#95

Post by toomuchtodo » Tue, Mar 31, 2020, 5:19 PM UTC

Der_Einzige wrote: post #91

thorwasdfasdf wrote: post #82

Earlier quoted context omitted.

but we're not having deflation. With fewer and fewer people working, there's less and less supply with even larger demand, now that they're printing money like never before. As a result, we're going to get really really serious inflation of over 2%, 3%, maybe even more than 3%. It doesn't sound like much because we've become innured to it. But, it's really bad. Just think, you earned 100K in 1 year and 1 year later i…

At the moment, foreign demand for the dollar is so high that we are experiencing deflation (liquidity is still too low which is entirely why the fed is moving towards negative interest rates), in spite of the money printer going "brrrrr"

> the money printer going "brrrrr"

For those who have yet to have the enjoyment of the experience: https://brrr.money/

Re: Ask HN: How to prosper under negative interest rates?

#96

Post by gwbas1c » Tue, Mar 31, 2020, 5:20 PM UTC

Disclaimer: There are plenty of people who know more than I do about economics... There are also plenty of people who know significantly less.

My understanding is that situations like this are solved by printing money. (Yup, good ol' inflation.) We (the US) will probably have to; the value of the dollar is skyrocketing compared to other currencies, which makes it hard for us (the US) to conduct business internationally.

What does this mean? Now is a great time to take on debt, or to shift debts to pay off debts more slowly. (For example, pay off your car loan with a home equity line of credit.) Why? In periods of high inflation, the real value of your loan's monthly payment goes down very quickly.

Why do I think we're going to have high inflation? A lesson from the depression is that forcing people to pay their debts during deflation kills an economy: Wages go down, so a higher percentage of a paycheck goes to debts, which then cuts demand for services, which further lowers wages.

Re: Ask HN: How to prosper under negative interest rates?

#97

Post by Der_Einzige » Tue, Mar 31, 2020, 5:21 PM UTC

poom3d wrote: post #20

I recommend you to read the book `intelligent investor` by Ben Graham. If you don't have the time, read chapter 8 and 20, as Warren Buffett has recommended it. It might not teach you how to prosper [under negative interest rate] but I think it will give you something to work on and provide you with a good framework in investing. I'm not a financial advisor so I cannot give you advice but I think investing in yourself…

Much as I like that book and want it to be true - some argue that Value investing is as useful as Technical Analysis - which puts it at just a bit more reliable than Chicken Bone divination.

Re: Ask HN: How to prosper under negative interest rates?

#98

Post by munificent » Tue, Mar 31, 2020, 5:26 PM UTC

mindslight wrote: post #85

munificent wrote: post #73

Earlier quoted context omitted.

I think your natural argument rests on the idea that money is somehow a time-independent measure of "effort" but I don't know if that really makes sense.

I agree that is part of my argument. People certainly treat money as if it should be a time-independent measure of effort. Is there another objective metric that you can imagine money representing? I do not think it makes sense to insist that money can only ever be subjective based on the possibility that transients can occur - eg a factory burning down does cause natural price inflation, but this is an exception rat…

I don't think have the luxury of imagining a metric that we wish money to represent any more than we can say that "the number of rats in New York" means anything in any abstract sense. The value of money is an emergent property of what people do with it and if its numeric measure fails to track our selected "objective metric", it's the fault of our metric, not money itself.

Re: Ask HN: How to prosper under negative interest rates?

#99

Post by Rury » Tue, Mar 31, 2020, 5:31 PM UTC

toomuchtodo wrote: post #95

Der_Einzige wrote: post #91

Earlier quoted context omitted.

At the moment, foreign demand for the dollar is so high that we are experiencing deflation (liquidity is still too low which is entirely why the fed is moving towards negative interest rates), in spite of the money printer going "brrrrr"

> the money printer going "brrrrr" For those who have yet to have the enjoyment of the experience: https://brrr.money/

Can someone explain the 'going brrrrr' meme to me?

I've seen it used in other contexts but can't quite fully grasp what is meant by it.

Re: Ask HN: How to prosper under negative interest rates?

#100

Post by 1-more » Tue, Mar 31, 2020, 5:35 PM UTC

bonestamp2 wrote: post #23

Here's what I'm looking at... Since interest rates will be low, it could be a good buying opportunity for investment property. There is always risk here and with a rent strike looming there is potential for even more. I was already in the market for investment property so I've been following various markets (zillow lets you export a ton of data about historic property values and projections). Prices haven't fallen ye…

> I was already in the market for investment property

I talked about buying a condo with my brother and renting it out but at the end of the day I'm just not comfortable just taking someone else's income because I happen to have the money on hand to make a down payment. It seems so predatory.